AI-Enabled PCs Flood the Market, but Demand Remains Uncertain

AI PCs flow into distribution pipeline, but who wants them?

Warehouses in the IT channel are stocking up with AI-capable PCs - industry watcher Canalys claims these made up 20 percent of all shipments during Q3 2024, amounting to some 13.3 million units worldwide. "Shipments," of course, simply means that these devices have left the makers' factory and been delivered to distributors, rather than 13.3 million AI-capable PCs being snapped up by buyers. Nevertheless, Canalys says this figure represents a sequential growth of 49 percent over the previous quarter, meaning that vendors are ramping up output of AI-enabled systems in the hope these will prove popular. Whether this will be the case at present is debatable. None of the industry experts we approached were able to give us any real insight on how well these AI boxes are selling compared with plain old PCs, or whether they are getting any traction with buyers. In one sense, this doesn't really matter, since it is likely you won't be able to buy any computer that isn't AI-enabled before long. Recent forecasts estimate that such systems may account for 43 percent of PCs by 2025, and go on to make up the bulk of the market by 2026. However, a look at the figures shows that Canalys is counting Macs in its AI-capable data, and these account for about half (47 percent) of all shipments, meaning that about 7 million Windows AI boxes were let loose into the channel during Q3. What is an AI-capable PC anyway? Canalys defines it as a desktop or laptop that includes some dedicated hardware for accelerating AI workloads, such as the neural processing unit (NPU) embedded in many of the most recent processors. But then Microsoft added to the confusion by introducing its own definition of "Copilot+ PC" to describe Windows systems with an NPU that performs at 40 TOPS or more, which is one measure of a computer's AI processing prowess. As Canalys says in its report, both Intel and AMD are still awaiting Copilot+ PC support from Microsoft for their latest CPUs, adding another swirl of uncertainty to the mix. Those Copilot+ PC boxes are likely to see lower sales than the plain AI-capable systems, analyst Kieren Jessop at Canalys told us. "The Windows units will ramp in scale in line with a silicon transition. That will be split between Copilot+ PCs (which have an NPU > 40 TOPS) and under 40 TOPS PCs. So far the signals are that Copilot+ PCs will have a far slower adoption rate than AI-capable Windows PCs of under 40 TOPS," he said. However, if it is performance you are concerned about, "it's important to note that GPUs still far outperform NPUs in terms of raw performance," Jessop said, while NPUs are more power-efficient and better suited for running perpetually. On those shipment figures, Jessop explained that many of these will form part of normal buying cycles rather than be driven by specific AI use cases. In particular, the looming end of Windows 10 support next year will be pushing many organizations into a PC refresh. "The 'AI capability' becomes a draw to businesses typically serving as a future-proofing measure rather than a primary purchase motivator at this stage," he said. Consumers, Jessop added, are "more likely to choose an AI PC for the extended battery life (via NPU advantages) rather than the AI features at this point." Canalys says a key challenge for vendors will be to convince customers to future-proof for a potential wave of on-device AI use cases, which is almost entirely lacking at the moment. In other words, AI PCs currently seem like a solution in search of a problem, but vendors will be keen to push them as they carry a 10 percent to 15 percent price premium over standard PCs, as Canalys has previously noted. Bryan Ma, IDC VP for Devices Research, agreed that the industry appears to be desperately searching for a use case for AI PCs. "The hope is that both Microsoft as well as third-party ISVs will emerge with more solid use cases in the upcoming years, but at this point such use cases are not obvious," he told us. "In the meantime, shipments of these AI PCs are a supply-side push, in large part on the basis of these systems featuring the latest-and-greatest processors rather than them being purchased specifically for on-device AI." So the transition to the world of AI-capable PCs seems inevitable as vendors gradually fill out their portfolio with systems based on processors with embedded NPUs. But as recent figures from Gartner show, the lack of a rebound in PC sales figures appears to indicate that buyer interest in AI-capable computers is - so far - minimal. ®

One in five PCs shipped in Q3 were AI-enabled, but that's not why people are buying them

The big picture: AI-enabled PC shipments reached 13.3 million units in the third quarter of 2024, accounting for 20 percent of all models shipped during the three-month period. That's up from 8.8 million AI PCs shipped last quarter, but it may still be too early to book your ticket on the AI hype train. Canalys said Windows devices made up the majority of AI PC shipments in the most recently quarter, but just barely with a 53 percent share. Last quarter, it was Apple's MacOS that led the way with a 59 percent stake. Despite the progress, PC makers must continue to convince consumers that AI PCs are worth the investment. Indeed, some would argue that AI PC shipments are not necessarily on the rise because buyers are explicitly seeking them out, but rather the computers people are buying just happen to have AI smarts built in. Canalys defines an AI PC as a desktop or laptop that ships with a chipset for dedicated AI workloads, like new Macs featuring Apple Intelligence and Copilot+ PCs with Snapdragon X chips. AMD and Intel also recently brought AI-ready solutions to market, with Ryzen AI 300 and Lunar Lake, respectively. Speaking of Copilot+ PCs, Ishan Dutt, principal analyst at Canalys, said a November poll of channel partners found that 31 percent do not plan to sell Copilot+ PCs in 2025, and that 34 percent expect such devices to account for less than 10 percent of their total sales in 2025. To get the coveted Copilot+ designation, Microsoft requires an NPU to have a minimum of 40 TOPS of performance. Either way, PC shipments are likely to climb in the coming months as we are now less than a year away from Windows 10's end of life date. According to StatCounter, Windows 10 accounts for more than 60 percent of the desktop Windows market share worldwide. With support winding down, lots of consumers will be turning to new Windows 11 PCs in 2025.